Meituan's Price War and the Economic Downturn Affecting China's Restaurants

Wednesday, 28 August 2024, 06:04

Meituan's price war is intensifying the economic downturn facing China's catering industry. With food prices slashed, restaurants struggle to remain profitable amid fierce competition and deflationary pressures. This trend threatens the sustainability of many establishments.
South China Morning Post
Meituan's Price War and the Economic Downturn Affecting China's Restaurants

The Impact of Meituan's Price War on China's Catering Industry

Meituan's price war has heightened challenges for China's embattled restaurants. Forced to cut food prices, owners are witnessing alarming declines in profits, especially in major cities like Beijing and Shanghai.

Current Situation

  • Restaurants in Shenzhen are closing at alarming rates as profit margins shrink.
  • Beijing's catering sector saw a staggering 88.8% profit drop compared to last year.
  • In Shanghai, losses for top catering companies reached 770 million yuan.

Competitive Landscape

Operators are engaged in a detrimental price war, exacerbated by consumers' constrained spending. As of now, prices on Meituan offer extraordinary deals, such as a burger set for 19.9 yuan.

The Broader Economic Context

  1. The decline in consumer confidence has led to minimal retail sales growth since March.
  2. With inflation almost flat for 15 months, the risk of deflation looms large.

Peng Peng from the Guangdong Society of Reform emphasizes the need for regulatory intervention to stabilize the sector, noting that these cuts exacerbated by economic instability will continue unless consumer demand improves.


This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.


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